At least I have a job

International sports brands enrich themselves in tax free economic zones in the Third World. Are ‘Corporate Social Responsibility’ merely fine words on a website? Play the Game tells the story of the free economic zones in the Philippines.

“If you don’t meet your daily quota, you have to work overtime; without payment. That’s how it works in the Philippines.”

She shrugs – sitting on the rubble in front of her home. A tiny room, 3 X 4 meter. She shares the room with another seamstress in the slums of Biluso just outside the Cavite Free Trade Zone, one of the biggest free economic zones in the world.

She works in the free economic zone, a tax haven created to attract foreign investments. For years – after coming from the poor provinces of the Philippines in the hope of a job – she makes clothes for international brands at Se Jung Apparel Inc., a Korean subcontractor going from one deal to another with big garment brands from the Western World in fierce competition with other subcontractors in the Third World.

From the Victorian era and worse

One of the deals at Se Jung Apparel Inc. was with the legendary boxing brand, Everlast. The shorts worn by Muhammad Ali, Jack Dempsey, Sugar Ray Robinson and even the Philippine legend, Manny Pacquiao. Everlast is owned by United Kingdom’s biggest sports retail, Sports Direct, whose largest stakeholder is the controversial businessman Mike Ashley, better known as the owner of the Championship club Newcastle United.

In 2016, a report by the Business, Innovation and Skills Committee at the British Parliament described the working conditions in the British warehouses of Sports Direct as being from the Victorian era, but the workers of the firm’s subcontractors have even worse working conditions.

“The manager screams faster, faster. Don’t laugh. Don’t talk. You cannot get a lunch break or visit the toilet, if you don’t reach your quota,” another worker tells Play the Game.

She got fired, because she would not work overtime without payment. Her friend with the sad eyes still works there:

“At least I have a job. I have to send money back to my parents and my siblings. Otherwise they starve.”

She earns 356 pesos a day, USD 7.6, for eight to twelve hours work, the minimum wage for this region in the Philippines. She is lucky – her assistant earns 250 pesos a day, USD 5.4, far below the minimum wage. But it is normal. According to a study by the United Nation organisation ‘International Labour Organization’ (ILO) conducted in August 2016, 53 per cent of the garment and footwear workers in the Philippines are being paid far below the minimum wage (less than 80 per cent of the minimum wage, ed.). A wage far below the amount needed for a family to exist on.

According to IBON, a non-stock non-profit development and research organisation in the Philippines, a family has to have 1,096 pesos daily, USD 23.5, as just a ‘poor’ family living wage in the Philippines. Seven out of ten Filipinos also see themselves as poor, according to a study by IBON, conducted in October 2016, and 53 percent have had difficulties buying enough food in the past three months.

The two workers, the seamstress and the assistant, both work six days a week. And despite years at the company they are still irregular workers without rights. They are hired by an agency, because this way Se Jung Apparel Inc. has no liability for them. That means that every five months they will get hired again. This kind of ‘contractualisation’ is against the law in the Philippines.

Still, 75 percent of the Philippine workers are hired this way, according to a United Nation study from November 2016. Among them, all at Se Jung Apparel Inc., according to Play the Game’s sources. Forced overtime without payment are contrary to the law too, and so are working without meal and rest period, harassment, missing social security, missing safety and health conditions at the environment in the factory and much, much more.

According to the workers, working for the legendary boxing brand Everlast and United Kingdom’s biggest sports retail, Sports Direct, all these phenomena live well at the factory and in Cavite Free Trade Zone.

No complaints

Despite numerous allegations of violations of nearly every labour law in the Philippines, the Department of Trade and Industry will not take any action on their own:

“We will never condone any labor violation in the PEZA economic zones. However, please note that we will not be able to investigate and take action if we do not receive formal complaints. In the event that PEZA has proven that there are labor violations, we will cancel their registration with us,” Mary Grace D. Perez from Promotion and Press Relations Group at PEZA (Philippine Economic Zone Authority, ed.) says to Play the Game.

Apparently, no one has complained. For sure, no one Play the Game has been talking to in the free economic zone in Cavite. They are all afraid.

“They don’t have any choice. They have to earn money and to send money back home. They are all domestic migrant workers, so they accept less than minimum wage, just to get a job. According to our study, we found workers accepting working for 35 per cent of the minimum wage at Cavite Free Economic Zone. It’s very bad working conditions and many, many violations of labor standards of the Philippine labor law,” Ramon Certeza, an organiser at IndustriAll, one of many unions in the Philippines, says.

They are better off

“Cavite Free Trade Zone is the biggest economic zone in the Philippines in terms of numbers of companies and workers. There are about 90,000 workers in the economic zone – and the majority is young single women from the provinces. They are very vulnerable. You know, they are daughters and sons of peasants from the rural area of the Philippines; without education. So they think, they are better off at the factories,” Cecile Tuico, international relations and campaign officer at the Worker’s Assistance Center (WAC) at Rosario, Cavite, explains.

WAC is a non-governmental organisation advocating for workers’ rights and helping workers with food and advice at Cavite Free Trade Zone.

“Normal working hour is 12 hours a day – six days a week. Even Sunday is used when an order must be completed. Especially the Korean companies are bad. You are not allowed to go to the toilet. You don’t get paid for overtime and so on,” she continues.

“So you have a lot of young workers not knowing anything about their rights. You have a lot of foreign companies, supported by the government. And the workers cannot organise. Every time workers try to build unions, they are dismissed. They call it industrial peace in the economic zones,” Tuico says.

So the workers – working for the United Kingdom’s biggest sports retail and the most legendary boxing brand – are just trying to survive. They all live in crowded rooms in the slums of Biluso. As for the young woman above, she pays 4,000 pesos a month, USD 85.7, for the tiny room – shared with a colleague. The landlord, he has long immigrated to Canada, and is now earning some pesos in the slums of Biluso. With the prices of daily necessities many of the workers must even resort to loan sharks to get enough money to survive for themselves and their family back home in the poor provinces:

“They have just enough to survive. And sometime even not that. There is no money for savings or emergency. They must save on housing, transportation, food and daily necessities for wages to strike,” Tuico from Worker’s Assistance Center states and continues:

“You borrow five pesos and pay six back. The loan sharks even get the worker’s credit card and paycheck, so they can withdraw the loan before the worker gets her payment. Many companies’ managers enrich themselves through this system.”

“And the company – they haven’t got any obligations to the workers, because they are all hired by an agency,” Cecile Tuico ends.

The show must go on

The story of the workers in the Cavite Free Trade Zone and the international sports brands is trivial. Free economic zones exist around the Philippines – and around the Third World.

For example in Lapu-Lapu City near Cebu in the Philippines. Here, Mactan Export Processing Zone 1 is located – and here, Adidas produces some of the firm’s sports wear at Feeder Apparel Corporation, Mactan Apparels Inc., Metro Wear Inc. and Yuenthai Philippines Inc. – and thus history repeats itself.

Play the Game was rejected at the gates of Se Jung Apparel Inc., Feeder Apparel Corporation, Mactan Apparels Inc., Metro Wear Inc. and Yuenthai Philippines Inc. All guards stated that the company would not talk to a journalist.

Everlast/Sports Direct has not responded to Play the Game’s inquiries.

Play the Game has chosen to hide the names of workers in the Philippines, due to the risk of serious harassment. Play the Game knows their names and working places.

Economic zones

Economic zones

The past decade has witnessed an explosive rise of global outsourcing. A game changer in the outsourcing business is the ‘free trade zone’. Most countries that have sizeable outsourcing business have successfully established such tax-sheltered enclaves, among them the Philippines – since 1991.

The economic zones in the Philippines give foreign investments a lot of fiscal incentives. Among them ‘income tax holiday’, ‘tax and duty free importation of raw materials’, ‘exemption from wharfage dues and export tax, impost or fees’ and ‘exemption from payment of any and all local government imposts, fees, licenses or taxes’. One of the major free trade zones in the world, which have gained considerable importance over the last years, is Cavite Free Trade Zone, near Manila in the Philippines. Economic zones in the Philippines administered by The Philippine Economic Zone Authority (PEZA), attached to the Department of Trade and Industry.

Fire

On May 13, 2015 a fierce blaze took hold of Kentex Manufacturing’s slipper factory in Valenzuela City, north of Manila. The fire lasted seven hours and claimed the lives of 72 workers. Only 45 workers escaped. They worked under sweatshop-like conditions – as in most of the garment and footwear industry in the Philippines. It was the worst factory fire the Philippines has ever seen.

The Philippines

According to the World Bank the economic growth in the Philippines has been strong with an average of 4.5 % annual growth in 2000-2009 and 6.2 % 2010-2015. Outlook for the Philippines say, that economic growth is likely to remain strong and accelerate to 7.1 % in 2016 and 6.2 % in 2017 and 2018.

The Philippines is ranked 103th in World Bank’s Doing Business Ranking 2016.